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Exam 17: Job Order Costing

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Question 61

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The document that serves as the basis for recording direct labor on a job cost sheet is the clock card.

A) True
B) False

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Question 62

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Recording jobs completed would include a credit to

A) Factory Overhead
B) Finished Goods
C) Work in Process
D) Cost of Goods Sold

E) B) and D)
F) A) and B)

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Question 63

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National Survey Company uses a job order cost system. a) Indicate the source of the data for debiting Work in Process for each of the following: 1) Direct materials requisitioned 2) Direct labor used b) Indicate the source of the data for crediting Work in Process for jobs completed. c) Present a list of the three controlling accounts used in the general ledger to record the inventories and, in each case, indicate the related subsidiary ledger.

On May 15, the stamping department accepted Job 051507A to make 1,000 funnels. Materials requisitioned was 1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set. The cost driver used by stamping department is the drop-forge strokes indicated by a machine mounted counter. Overhead is applied at $2.25 for each drop-forge stroke. Additionally, $375.00 of overhead is applied to each job due to setup and tear down. Direct labor is applied at $22.50 per hour for the machine operator and $11.10 for the machine loader. The job required 6.5 hours of labor. Upon completion, the job was transferred to Finished Goods Inventory. Journalize all events as of May 15.

Which of the following entries would not be found on the books of a service provider?

Classify each of the preceding costs as product costs or period costs. For those costs classified as product costs, indicate whether the product cost is a direct materials cost, direct labor cost, or factory overhead cost. For those costs classified as period costs, indicate whether the period cost is a selling expense or an administrative expense. Use the following tabular headings for preparing your answer. Place an X in the appropriate column. ANSWER: -Discuss how job order cost information is used in decision making. What are some possible reasons that actual cost of materials would exceed expected costs for a job?

A manufacturing business reports just two types of inventory on its balance sheet: work in process inventory and finished goods inventory.

Cranston Company estimates the following overhead costs for the coming year: $\begin{array} { l c } \text { Equipment depreciation } & \$ 160,000 \\\text { Equipment maintenance } & 60,000 \\\text { Supervisory salaries } & 40,000 \\\text { Factory rent } & \underline { 100,000 } \\\text { Total } & \$ 360,000 \\\hline\end{array}$ Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year. Required: a. Calculate the predetermined overhead rate using direct labor costs as the allocation base. b. Calculate the predetermined overhead rate using machine hours as the allocation base.

If factory overhead applied exceeds the actual costs, overhead is said to be under applied.

Each document in the cost ledger is called a

Match the costs that follow to the type of product cost a-c) or designate as not a product cost d) . -maintenance supplies

Match each of the following phrases with the term a-e) that it most closely describes it. Each term will be used only once. -serves as the basis for recording materials used

Using the job order cost system, service organizations are able to bill customers on a weekly or monthly basis, even when the job has not been completed.

Each account in the work in process subsidiary ledger in a job order costing system is called a job cost sheet.

The source document for the data for debiting Work in Process for direct materials is a

The journal entry to record the purchase of $45,000 of raw materials is

Job order costing and process costing are

If the under applied factory overhead amount is immaterial, it is transferred to Cost of Goods Sold at the end of the fiscal year.

The Cavy Company estimates that the factory overhead for the following year will be $1,470,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. Calculate the predetermined overhead rate to apply factory overhead.

When the goods are sold, their costs are transferred from Work in Process to Finished Goods.